Business rates on empty commercial property, also known as the empty property rates, can be a significant financial burden for property owners Whether you own a small shop, a large office building, or a warehouse, understanding how business rates on empty commercial property are calculated and how you can mitigate the costs is crucial to managing your property effectively In this article, we will explore the ins and outs of business rates on empty commercial property and provide you with strategies to minimize the financial impact.
Business rates, often considered as the equivalent of council tax for commercial properties, are taxes levied on non-domestic properties in the UK These rates are calculated based on the rental value of the property, which is determined by the Valuation Office Agency (VOA) When a commercial property is empty, the owner is still liable to pay business rates, albeit at a reduced rate compared to when the property is occupied.
The government’s rationale behind charging business rates on empty commercial property is to encourage property owners to bring their properties back into use, thus preventing vacancies and revitalizing the local economy However, this policy can pose a significant challenge for property owners, especially during economic downturns or when the property market is experiencing a downturn.
The rates on empty commercial property are usually charged after the property has been empty for a specified period, known as the empty property rate period In England, the current empty property rate period is three months for most commercial properties, while in Wales and Scotland, the period can vary After the empty property rate period expires, the property owner is required to pay the full business rates unless they qualify for certain exemptions or reliefs.
There are several exemptions and reliefs available for property owners to reduce the amount of business rates they have to pay on empty commercial property For example, newly built properties are exempt from paying business rates for the first three months after completion, regardless of whether they are occupied or not business rates empty commercial property. Similarly, properties with a rateable value below a certain threshold may qualify for small business rate relief, which can significantly reduce the amount of business rates they are required to pay.
In addition to exemptions and reliefs, there are also strategies that property owners can use to minimize the financial impact of business rates on empty commercial property One common approach is to enter into a temporary occupation agreement with a charity or community group, which can qualify the property for mandatory relief on business rates The property owner can also consider leasing the property on a short-term basis or offering flexible terms to attract businesses looking for temporary premises.
Another approach to managing business rates on empty commercial property is to invest in property improvement works that can increase the property’s rental value By enhancing the property’s aesthetics, functionality, or sustainability, the property owner may be able to attract tenants more easily and command higher rental rates, which can offset the costs of paying business rates on an empty property.
Property owners can also consider challenging the rateable value of their commercial property if they believe it has been over-assessed by the VOA By appealing the rateable value and providing evidence to support their case, property owners may be able to secure a reduction in their business rates liability It’s important to note that challenging the rateable value can be a complex and time-consuming process, so property owners should seek professional advice before taking this step.
In conclusion, managing business rates on empty commercial property can be a challenging task for property owners, but with the right strategies and knowledge, it is possible to mitigate the financial impact By understanding how business rates are calculated, exploring exemptions and reliefs, and implementing proactive measures to attract tenants, property owners can reduce their business rates liability and make their properties more attractive to prospective tenants Ultimately, by effectively managing business rates on empty commercial property, property owners can maximize the return on their investment and contribute to the economic vitality of their local community.